(1) An application for approval under section 45(4)(b) of the Act in Form No. 17 shall be made to the Commissioner of Income-tax having jurisdiction over the applicant, at any time during the financial year immediately preceding the tax year from which the approval is sought, so however, that any application for tax year 2026-27 may be made at any time during the said tax year.
Rule 32 of the Draft Income-tax Rules, 2026 prescribes detailed guidelines, form, and procedure for obtaining approval under Section 45(4) read with Section 45(3)(a) of the Act. An application in Form No. 17 must be filed with the jurisdictional Commissioner of Income-tax during the financial year immediately preceding the tax year for which approval is sought, except for tax year 2026–27 where filing may be made during that tax year. The form must be verified by the authorised person under Section 265. Research associations claiming exemption under Schedule III (Sl. No. 23) must complete the annexure to Form 17. A copy of the application must also be sent to the Member (IT), CBDT.
The Central Government must issue notification or reject the application with reasons within twelve months from the end of the quarter in which the application is received by the Member (IT), CBDT. Approval may be granted for up to five tax years. If defects are found, the Commissioner must issue a deficiency letter within one month, and the applicant must rectify deficiencies within one month thereafter, failing which the application may be treated as invalid.
Where complete, the Commissioner may conduct inquiries regarding genuineness of activities and submit recommendations within three months. The Central Government may call for further information before granting approval and may withdraw approval if activities cease, lack genuineness, or violate conditions under Rules 33 or 34. No adverse order shall be passed without providing an opportunity of hearing. Fresh applications must be filed at least three months before expiry of approval.
Extract of Rule No. 32 of Draft Income-tax Rules, 2026
Rule 32
Guidelines, form and manner in respect of approval under section 45(4) read with section 45(3)(a) of the Act.
(2) Form No. 17 shall be verified by the person who is authorised to verify the return of income under section 265, as applicable to the applicant.
(3) If the research association claims an exemption as per schedule III (Table: Sl. No. 23) of the Act, then annexure to Form No. 17 shall also be filled out.
(4) The applicant shall send a copy of the application to Member (IT), Central Board of Direct Taxes accompanied by its acknowledgement receipt as evidence of having furnished the application as per sub-rule (1). Draft Income-tax Rules, 2026 39
(5) Where an application is made under sub-rule (1), every notification under section 45(4)(b) shall be issued or an order rejecting the application shall be passed by recording reasons in writing by the central government within twelve months from the end of the quarter in which such application was received in the office of Member (IT), CBDT.
(6) Any notification issued by the Central Government under section 45(4)(b) shall, at any time, have effect for such tax year or years, not exceeding five tax years as may be specified in the notification.
(7) If any defect is noticed in the application or if any relevant document is not attached thereto, the Commissioner of Income-tax shall serve a deficiency letter on the applicant before the expiry of one month from the end of the month in which application is received in his office.
(8) The applicant shall remove the deficiency within a maximum period of one month from the end of the month in which the deficiency letter is served and if the applicant fails to remove the deficiency within the period so allowed, the Commissioner of Income-tax shall send his recommendation for treating the application as invalid to the Member (IT), Central Board of Direct Taxes.
(9) The Central Government, if satisfied, may pass an order treating the application as invalid.
(10) If the application is complete in all respects, the Commissioner of Income-tax, may make such inquiry as he may consider necessary regarding the genuineness of the activity of the research association or university or college or other institution and send his recommendation to the Member (IT), CBDT for grant of approval or rejection of the application before the expiry of the period of three months from the end of the quarter in which the application was received in his office.
(11) The Central Government may, before granting approval under section 45(4)(b), call for such documents or information from the applicant as it may consider necessary and may get any inquiry made for verification of the genuineness of the activity of the applicant.
(12) The Central Government shall withdraw the approval granted under section 45(4)(b), if it is satisfied that the research association or university or college or other institution has ceased its activities or its activities are not genuine or are not being carried out in accordance with all or any of the conditions under rule 33 or rule 34.
(13) No order treating the application as invalid or rejecting the application or withdrawing the approval, shall be passed without giving a reasonable opportunity of being heard.
(14) A copy of the order invalidating or rejecting the application or withdrawing the approval shall be communicated to the applicant, the Assessing Officer and the Commissioner of Income-tax having jurisdiction over the applicant. Draft Income-tax Rules, 2026 40
(15) The applicant, may, at least three months before the expiry of the effective period of the notification issued under sub-rule (5), make an application to the Commissioner of Income-tax having jurisdiction over the applicant for fresh notification.
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